Correlation Between Xerox Corp and Accenture Plc

Can any of the company-specific risk be diversified away by investing in both Xerox Corp and Accenture Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xerox Corp and Accenture Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xerox Corp and Accenture plc, you can compare the effects of market volatilities on Xerox Corp and Accenture Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xerox Corp with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xerox Corp and Accenture Plc.

Diversification Opportunities for Xerox Corp and Accenture Plc

0.53

Correlation Coefficient

Xerox Corp  Accenture Plc

Very weak diversification

The 3 months correlation between Xerox and Accenture is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Xerox Corp and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Xerox Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xerox Corp are associated (or correlated) with Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Xerox Corp i.e., Xerox Corp and Accenture Plc go up and down completely randomly.

Pair Corralation between Xerox Corp and Accenture Plc

Considering the 90-day investment horizon Xerox Corp is expected to under-perform the Accenture Plc. In addition to that, Xerox Corp is 2.07 times more volatile than Accenture plc. It trades about -0.04 of its total potential returns per unit of risk. Accenture plc is currently generating about 0.1 per unit of volatility. If you would invest  29,556  in Accenture plc on October 7, 2024 and sell it today you would earn a total of  5,829  from holding Accenture plc or generate 19.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Xerox Corp  vs.  Accenture plc

Xerox Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xerox Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Accenture plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accenture plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Accenture Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Xerox Corp and Accenture Plc

The main advantage of trading using opposite Xerox Corp and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xerox Corp position performs unexpectedly, Accenture Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Accenture Plc will offset losses from the drop in Accenture Plc's long position.

The idea behind Xerox Corp and Accenture plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.